Growth5 Blog

Wednesday, September 21, 2011

6 Secrets of Fundraising Success

VentureBeat recently posted this article: Six Secrets of Fundraising Success, submitted by Jon Olafsson who is chairman and co-founder of Icelandic Water Holdings (IWH). The bottled water company has raised $23mm from friends, family and institutional investors over the last twelve months. The six secrets to their fundraising success:
1. Keep it simple.
IWH reduced the investment proposition to four essential pillars and demonstrated how they had a competitive advantage in each. Oftentimes startups complicate how they present their business because they feel the basics are too "thin." Simpler is always better, because for starters it's understandable.
2. Go with what works.
IWH bought the land containing the spring they get their water from. They found that investors liked owning a piece of that valuable resource. I suspect the real estate ownership angle quickly became a highlighted section of the investor presentation.
3. Emphasize the positive.
Communicate any successes the company is experiencing, no matter how small. That type of message engenders confidence in investors, as it reminds them the company isn't just an idea, it's a living breathing entity.
4. Eliminate the negatives.
You know the top three items the VCs are going to use as their reasons to say no. Prepare for them. Give them the data that can turn those items around and get some yeses.
5. Follow-up on all leads.
IWH tapped their personal networks and used two international investment banks to help them find investors. They also offered placing commissions of up to four percent to incentivize people to find investors for them. In the end they raised half the money from friends and family, and the other half from South African institutional investor Bidvest.
6. Believe in the business.
"There are always dark days in a business and fundraising can be especially frustrating in the current environment... Some potential investors offered us terms that were much poorer than the ones we finally achieved.  It was our confidence in our business that gave us the strength to say no."

You know your business and the value it has to offer. Get out there and tell your story and don't let anyone push you around because the economy isn't great. Do you really want to be in business with someone that would push you around anyway?

There's money out there, utilize these tips and you'll make it a lot easier on yourself in landing some of it.

Labels: , ,


Post a Comment

Subscribe to Post Comments [Atom]

<< Home